Honeywell, Tyco And Other Dividend-Paying Stocks Are Still Buys, Says Cautious Top Investor Stovall

Mortgages are being serviced a little bit more positively than they had been. So I like PNC Financial Services (NYSE:PNC), which sells around $65. It's a Pittsburgh-based bank. You're seeing mortgage payments, mortgage delinquencies and so-on being paid down a bit now. Real estate is one of the major aspects of our troubles of recent years, and it seems to be bottoming.

Another idea is to look for companies that are widely diversified, with strong managements. A good growth stock, a good growth company in that camp is Honeywell (NYSE:HON). It sells around $62. It’s involved in aerospace parts and also construction. I think construction will pick up as one of the big areas of activity that is way down. Also the management has a dividend growth strategy.

And then you have a company called Tyco (NYSE:TYC), which sells at about $54. It's going to split itself apart, as some companies have been doing lately. Kraft foods did it a while ago.

Stocks frequently go down when they split up because company shareholders get confused. But it may be an opportunity if the stock weakens. Tyco has some very interesting divisions which will be spun out and set up on their own. So take a look at that one.

And then I believe that energy remains one of the basic materials that we'll have to keep reaching for. There's a stock called Seadrill (NYSE:SDRL). It is Scandinavian-managed. All their rigs are very specialized for deep water and cold water activities.

They're all leased out for some time to come. The company is not too well known, but it's New York Stock Exchange traded.

Forbes: That's very interesting, Bob. Basically a cautious view, but also some places that you think there offer sound potentials.